Tales from the grocery store: Part 1

So…about that time that I bought a grocery store…

Yes. I’m serious.

I’m not sure how many parts this story could be. This time in my life holds so many great memories and a few bad ones too, so it could be 4 or 5 parts by the time I tell all there is to tell.

Almost every day, I’m reminded of “something” that takes me back to that time in my life and I think: “I should tell that story.”

The year was 1999 and I was in my last semester at Lambton College in Sarnia. I had spent a fair bit of time looking for jobs for 5 or 6 years but never did have much luck with a conventional “job.”

I had done a few different things to make money. I had a paper route, bought and sold some cattle and worked briefly for a Chartered Accountant. But none of those jobs were going to be my future.

Like every other young adult, I was trying to figure out what I was going to do, especially now that I was just a few months away from finishing college.

When it comes to job-hunting, the disability really throws people off when they meet me and job interviews are always awkward. There are some limitations that you just don’t think about, and many normal jobs were not possible for me, so it seemed that self-employment in one form or another was the most sensible option.

You might be wondering – How (& why) did Jonny buy a grocery store?

One Sunday morning at church, I was approached by a local real estate agent. She wanted to make me aware that the grocery store in Oil Springs was for sale.

I had never given much thought to the grocery business. I was 20 years old – Young, naive, proud…with no sense of what “risk” really was, so when Lorraine asked me if I wanted to buy the grocery store, I thought – “Sure, why not?”

I got the information package from her, my parents and I looked at the numbers and based on how much money I would need to pull it off, it seemed attainable.

The business came with a building, a rental apartment above the store and the inventory.

It wasn’t overly expensive. About 1/3 of the price of the value of the house that I currently live in, so if you’re thinking millions of dollars – it wasn’t that much! In terms of size, think large 7-11 or pharmacy.

Once we decided to buy, the next step was to obtain financing. I did some research and found that the Government was offering small business loans that were partially secured by the Government. The Government basically co-signed part of it and my parents co-signed for the balance.

I remember showing up to the local business banking branch in Sarnia to meet with the lady that specialized in small business loans. I arrived with my business plan in hand, wearing a T-shirt, Umbro shorts and sandals. Dad met me there as he worked close to the bank.

The business banker was professional, wearing a nice women’s business suit. She gave me the once-over and I could tell she was having a hard time believing what she was seeing. She asked a number of questions, for which I had some partial, naive answers to. My Dad gave her some info and that was about it. She said she would call us in a week or two, once the paperwork was processed to let us know if we were approved.

I still remember the day I found out it was approved for the loan.

I was eager to get an answer so I was checking our voicemail at home from time to time when I was out. This was back when there were still phone booths. I stopped at a gas station and called through to our voicemail and there was 1 new message. It was the lady at the bank, sounding rather upbeat and surprised, letting me know that the loan had been approved and that we needed to make another appointment to finalize things.

I was on my way!

Now I needed to think of a name. What am I going to call my grocery store?

The previous owner for many years had named the store with his last name, so I didn’t want to keep that. A few people had mentioned to me about calling it “Jonny’s Market” but I just didn’t think that sounded right. As I was driving to the Government office to buy the business license, I settled on “Oiltown Market.”

The name resonated with me because it was in Oil Springs. For some reason, I didn’t like “Oil Springs Market” but I liked “Oiltown.”

Fast forward a couple of months and a few little hiccups along the way, I was the proud owner of a small grocery store, in a small town that was generally on the decline. The bank had closed a year or two earlier and there weren’t many businesses left in town.

One of the things that I still laugh at is that my business plan presented to the bank showed that in my first year, I would increase sales by 70%. The bank was pretty skeptical that sales could increase that much in one year, but at the same time, their real risk was low.

Guess what? Sales increased 69% in the first year. So there!

It’s funny and impressive looking back on it.

The trouble is, in order to get sales to that level, I had to spend a lot of money on new equipment, marketing and so on. I needed to change the perception of the store and draw in people who had never been in the store.

It worked – but it left me in a pretty tight spot for subsequent years.

The real issue was that this was ALL borrowed money. I didn’t go into the business with working capital.

It was all loans and lines of credit, so every new upgrade, new freezer, new compressor, the ATM and so on, was borrowed money. The thing my young mind didn’t quite understand is that this money needed to be repaid.

It’s a whole lot easier to get into debt than it is to get out! A hard concept for a 20-year-old to learn on the fly. When you’re 20 years old and holding onto a stack of $2000 in 20 dollar bills, it “seems” like a lot of money, but it’s really not. A good portion of that money needs to go back into purchasing more product, paying the massive electricity bill, paying staff and so on.

Another issue to consider is that groceries are generally a low margin product, so you need to sell a lot of them to make money. Some products actually had zero profit.

For example, some highly popular products, where the maker knows people want their products will shortchange the stores selling them by not giving much room for markup.

Imagine a product that everyone wants. I won’t mention the brand specifically so as to avoid negative attention.

I would buy this product from my wholesaler for $2.99. Guess what the suggested retail price was? $2.99. Many stores were selling it for $2.99, but I just couldn’t, so I would sell it for $3.29. Of course, the price conscious folks out there were quick to point out that “the store down the road was selling this for $2.99.”

Well. Good for them. I’ve got 10’s of thousands of dollars in products sitting here, I have a massive electricity bill, taxes, staff, building and equipment repairs and so on. Selling a product at no profit wasn’t going to work.

Soapbox: I still have a soft spot for small, independent businesses. Most of the time if I have the choice to purchase a product at a small, independent store, vs a major retailer, I will opt for the slightly higher priced item at the independent store, because I know what they’re going through. Getting the “best deal” doesn’t always mean getting the lowest price, FYI. There are social consequences to every purchase that you make.

When you see a smaller retailer offering a product slightly higher than the big box store, don’t assume they’re trying to rip you off. Could it be that they’re just trying to make a living?

Support your small town businesses and small independent stores. If you don’t, the effects on your community can be devastating.

Have you ever driven through small towns and wondered why so many of them are dead or dying?

It’s because people found out they could save a $1 on ketchup at the Big Box store 20kms away. The quest for savings – to keep more money in “my” pocket, took money right out of someone else’s pocket and the businesses closed. If you want to live in a world with 3 large retailers, by all means, continue shopping at the big corporate stores. 🙂

Can you truly feel good about the social consequences of your purchases, knowing that? It’s just something to think about.

End of Soapbox

There’s much more to this story, but I will leave it here for Part 1. Stay tuned for Part 2 at a later date.

6 thoughts on “Tales from the grocery store: Part 1”

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